Saturday, 20 June 2015

The Reverse March of Labour

Why did Labour lose in May? What aspects of the defeat were
familiar from your own time in British politics?

I think Labour lost (setting aside technical issues like
the restriction of the franchise) because they failed to offer an alternative
view of how the economy should be run and in whose interests – which is the
central question in current democratic politics.

They had no chance of convincing people that they could
produce different and better outcomes, if they failed to signal a departure
from Tory priorities – as in the case of committing to eliminate the deficit,
as though it makes sense to isolate this relatively minor aspect of the UK’s
economic problems and treat it as the top priority.

Almost all candidates in the Labour leadership contest have
talked of the need to appeal to ‘wealth creators’ whilst enabling ‘aspiration’.

Wouldn’t wealth creation include many who work in the public sector (for
example, in universities) – in fact, anyone who creates anything?

In relation to socialist objectives, how can we move on from this to define a
common wealth in 2015?

The keenness to talk about ‘aspirations’ is often
short-hand for, ‘we need to pay more attention to middle class interests and be
more like the Tories’.

I don't say we shouldn’t try to appeal to a wider range of
opinion and interests, but that should not mean abandoning others. The
goal should be to show that a different approach would meet the interests of
most people.

The point you raise about ‘wealth creation’ illustrates
this point. The current tendency is to accept that ‘wealth creators’ are
the owners, employers and investors, while the contributions made by others are
best regarded as production costs.

I think that all those involved in the productive sector,
in whatever capacity, are ‘wealth creators’ and that they should be
distinguished from those in the speculative sector – the financiers and
rentiers – who make their money not by creating new wealth but by gouging it
out of the rest of us.

The shame is that the unemployed are denied the chance to
join the ranks of wealth creators.

‘It’s been a
painful process of withdrawal from hope and idealism…. I think we have simply
given up. I think we will secure power, but I don't think we’ll make much of
it. As soon as the voters recover their confidence in the Tories we'll be
removed, in order to make room for the real thing’.

Is this fairly accurate as an appraisal of the last Labour governments,
and if so, what now?

I adhere to this view. If the best we can offer is
that we will be ‘Tory-lite’, we can't be surprised if the voters prefer the
real thing. Even if they don’t like Tory policies much, they are attracted by
those whose hearts are really in it.

The left, for three or four decades, have too often
believed in their heart of hearts that there is no alternative to neo-classical
economics and they have therefore struggled to sound convincing when they say
they can do better.

As the MP for Dagenham you were one of a handful of Labour
MPs in southern seats in the 1980s.

After thirty years, Labour’s situation in the south is in some respects worse,
with heavy attrition of membership and the breakdown of multiple smaller
branches into sparsely populated Constituency Labour Parties (CLPs).

What can Labour do to win support from voters in the south in the future?

Labour too readily accepts that voters in the south are
different, with the result that they either accept that those voters are beyond
reach or believe that they have to be addressed differently. That is not
how I see it.

While voters in the south (which is just another way of
describing the better-off middle class) are on average better off and have
better jobs, services, etc., they have just as big a stake as anyone else in a
successful economy that serves everybody's interests and in a society that is
not fragmented or divided against itself.

I think it is too easy to assume that particular approaches
have to be made to particular groups, such as ‘white working class voters’,
when Labour's best approach is to assert that policies that will, in fact,
benefit virtually everyone are the best way of looking after particular groups,
including the disadvantaged.

And in any case, not every voter in the south is well off –
there are many who will be sensitive to poorer public services, widening
inequality and worsening job security.

The task for Labour, in other words, is not to develop many
sets of policies that will meet as many specific interests as possible (thereby
running the risk of confusing and embarrassingly inconsistent policy stances)
but to provide an overall and persuasive analysis of what a successful economy
and an integrated society would look like and of how to bring them about.

It’s a further illustration of Labour’s lack of
confidence. The Tories are perfectly ready to proclaim that they are the
party for the 'working man'.

On the point about activism and membership, all parties
face this problem. The Tories don’t worry about it, because they can use their
advantages in financial resources and media support to communicate directly
with the voters.

We need to be much quicker on our feet – taking up
individual, local and short-lived issues that command public interest and
showing how the correct responses to those issues are best arrived at by
applying our overall set of values and view of how society should work.

People drawn in, even if only temporarily on a particular
issue, will remember that experience on polling day.

You once described New
Labour as a ‘soufflé of good intentions’. Do you think this incoherence remains
an issue with Labour in 2015?

If so, what, if anything, can be done to
provide a true, values-based ethos to Labour as a prospective party of
government?

Yes, I still think this is true. Labour would like to
do good things but is faced with the roadblock that they have no idea how to
disengage from the current orthodoxy.

They are unwilling or unable to do the hard work needed to
identify a better alternative and can’t conceive that there could be new
thinking that is not going to be condemned as ‘left-wing extremism’.

Moving on to economics, you were very critical of the
decision to make the Bank of England independent, and have consistently argued
for a different approach to monetary supply.

To what extent do you think it is essential that the supply of credit
is diversified?

This next question takes me to the heart of the problem.

Without a new approach to major issues like monetary policy
and an understanding of its true purposes we can't develop an alternative
economic strategy. We need to update Keynes (if that doesn’t sound too
presumptuous) so as to fill a couple of lacunae in his analysis.

We need to ensure, for example, that monetary policy is not
the exclusive domain of the banks and is not used solely to boost their profits
rather than serve the public interest – and that’s why allowing the central
bank to run it is such a bad idea.

If we want government to take responsibility for full
employment, which should be the primary goal of economic policy, ministers
should be accountable and not permitted to sub-contract their responsibility to
the bank.

There’s been a bit of
debate in some circles recently regarding the validity of full employment as a
goal.

This is not to say that consigning
people to a life on poverty-level benefits is acceptable, more that the goal of
full employment is both too unspecific regarding under-employment (for example,
zero-hour contracts) and also neglects the danger that the state will use
coercion upon the unemployed to force them into workfare and other deflationary
schemes.

As the founder of the Full Employment
Forum, do you think that in the world of ‘Sports Direct’-type employment, full
employment remains a valid goal?

Implicit within a lot of current
criticism of full employment is that the state should offer Unconditional Basic
Income….

I’m suspicious of the argument that full employment,
however defined, is for some reason now unattainable, since it is so convenient
for employers and others to retain a pool of unemployed.

Keynes and others had no difficulty in defining full
employment as a condition where there are as many jobs as (or perhaps a few
more than) there are people looking for work. I think we should be careful
about what employment means for the purposes of this and any other definition.

A zero-hours contract is not in my view the equivalent of a
job and nor is part-time work a job for someone wishing to work full-time. In
New Zealand at present, even a one-hour working day is treated as a job and
therefore as reducing the unemployment total.

As to how full employment is to be achieved, Keynes was
interested in direct job creation so that the government or public sector would
be the employer of last resort.

He saw this as the means of avoiding variable employment
levels since even a high level of aggregate demand or GDP would not necessarily
mean that effective demand (i.e. predictions as to future demand) would be
high enough to persuade the private sector to employ everyone available for
work.

I think the theoretical argument is accurate enough but the
proposition is politically difficult (particularly for a public conditioned to
believe that unemployment is the result of fecklessness!) and may not be
practicable, in its pure form at any rate. Similar doubts of course apply to
the notion of a ‘refusal of work’.

I do think, however, that something that would be
recognised as full employment is attainable if we were to get the economy
moving again by addressing our two main problems – a loss of competitiveness in
the productive sector and the absence of proper financing for industry.

As a slightly separate point, I think there is considerable
merit in a Universal Basic Income, both as an anti-poverty measure and a
simplification of our complex benefits system and as a recognition that, as
citizens, we are all entitled to share in at least the basic benefits of living
in society.

I am quite clear that the rise and rise of house prices is
huge driver of widening inequality.

A good illustration of the process is the recent
announcement that a generous right-wing government in New Zealand will raise
benefits for the poorest families by $25 per week, at a time when the owners of
houses in Auckland have seen the value of their houses rise over the past year
on average by $2000 dollars per week.

That rise in dollar value is entirely the result of
irresponsible bank lending, and is not matched in any way by a rise in real
output – it represents a transfer of resources from those who don't own their
own homes to those who do.

One of the more controversial stances you took in the 1980s
concerned employee share ownership, and encouraging this as a form of common
ownership. Would you revise this stance, based upon developments since then?

If the profit motive is so vital and beneficial, why not
extend it to the whole work force?

Employee share ownership, or something like it, would be a
practical reflection of the fact that they are all wealth creators.

Anything that would make private companies more responsive
to the wider interest would be helpful.

Over the space of the last five years, Labour has moved
from defending investment to subscribing to a reduced version of Conservative
spending cuts.

What are the political implications of this? Could it eventually lead
to what is sometimes called the ‘Pasokification’ of Labour – its slow
disappearance and fade to obscurity?

Is there a way for Labour to move beyond what could be permanent
austerity, in the face of fierce media attacks?

As I indicated earlier, the commitment to cut public
spending was the major mistake made by Labour over the past five years.

It seemed to validate the Tory attacks on Labour’s economic
record and to demonstrate that there was no alternative to further cuts.

It shows a serious lack of expertise and a complete unawareness
of what is happening outside Westminster in respect of moving away from current
orthodoxy.

When the IMF and the OECD, every major central bank and
many leading economists are in various ways denying the validity of austerity
as a response to recession, seeing inequality as an obstacle to economic growth
rather than as a necessary price and pre-condition of it, and recognising the
possibilities of monetary policy (albeit through quantitative easing to
shore up the banks) as a means of getting the productive economy moving, rather
than just as a counter-inflationary instrument, why does Labour remain stuck in
a time warp?

If we don’t escape from this intellectual straitjacket, our
days are numbered – Pasokification indeed!

During the late 1980s and early 1990s you were possibly the
only consistent front-bench Opposition critic of the EU’s Maastricht Treaty,
which set the conditions for monetary and fiscal convergence, and which
institutionalised harsh monetary control into the European project.

Whilst the UK has been spared the worst excesses of monetary restraint,
it is a less-connected part of a European Union which has increasingly acted as
an enforcer for economic liberalism and privatisation, and whose institutions
remain remote from popular consent.

With the In/Out
referendum approaching, is there a serious prospect that the EU – and the
Eurozone – can be reformed to reflect a progressive economics that places
social and environmental goals at its centre?

If not, then what are the likely
consequences of a vote to leave the EU?

The euro was always doomed and we did well to keep out of
it.

A single currency was a means of enforcing a single
monetary policy for a highly diverse European economy (which was always going
to be disastrous), and of setting in concrete a monetary policy that would be
congenial to Germany but – reinforcing as it would neo-classical precepts –
would do great damage to everyone else.

I fear that the supporters of the euro will press on to the
bitter end, whatever the consequences. A ‘grexit’ would help but would be
no more than a warning which the Germans would no doubt ignore.

The only solution, which a British withdrawal from the EU
might help to achieve, would be to abandon the euro and re-configure a Europe
that is built on functional cooperation and growing convergence, with each step
going no further than would warrant political support from the people.

The question for the UK is not, in other words, either
wholly in or wholly out – it is inconceivable that trade barriers would be
re-erected and we would retain, even outside the EU, a huge range of common
interests with it – but how best to preserve a European future that has some
chance of success, further development and longevity.